Dimeco, Inc. reported earnings results for the nine months ended September 30, 2013. For the period, the company reported net income of $4.6 million. This resulted in a return on average assets of 1.02%, a return on average shareholders' equity of 10.02%, and earnings per share of $2.82.

Net income declined $411,000 or 8.2% compared to the same period in 2012. When compared to budget, results of operations are very close to its projections. The primary components of the change in net income are as follows: Net interest income increased $287,000, primarily due to the decrease in the cost of funds of 16.8%.

Although interest income earned on loans and investments has declined from year to year, the company recognized a greater decline in the cost of funds over the period. Provision for loan loss expense was $700,000 or 35% greater for the first nine months of 2013 than in 2012. Loan quality issues are aggressively managed including charging off or down loan balances, requiring the increases in provision expense to maintain the Allowance for Loan Loss at the appropriate level.

Noninterest income increased $491,000 or 15.4% for the first nine months of 2013 compared to the same period in 2012. Noninterest expense was $899,000 or 8.3% greater for the first nine months of 2013 than a year earlier. Several factors contributed to this increase including: payroll and employee benefits were $187,000 or 3.2% greater due to adding several employees for its newest branch combined with normal salary increases; legal expenses increased $184,000 or 112.2% as the company continue loan workout issues; and the company have recognized declines of $388,000 in market value of three properties that were held in other real estate owned, which was $213,000 greater than these expenses in 2012.

Smaller increases in other noninterest expense items accounted for the remaining increase.